Today’s wages numbers and unemployment data out tomorrow will either hose down the fears that the Reserve Bank will raise interest rates in June, or escalate the headlines that another hike is coming. That means for anyone praying for no more increases in their home loan repayments, the bad news of wages rises being low today along with more people out of work tomorrow will be good news for them.

The AFR tells us that last Friday, the money markets saw a 34% chance of rates rising by August. Today that’s grown to 58%! In contrast, the experts who play in the bond market, which is all about interest rates, think there’s only a 12% chance of a June rise. I hope they’re right.

Of course, these guys and gals in the money market can get it wrong. Few expected Dr Phil Lowe to raise rates earlier this month, but right now, economists and other market experts aren’t seeing sufficient bang for the RBA cash rate raisings so far.

Economic data isn’t screaming that the economy is going into reverse fast enough for anyone to really believe that the past 11 rate rises are already squeezing spending for enough people to believe that inflation will fall to the 2-3% band that the RBA wants.

Inflation’s last reading was 7% for the March quarter so that doesn’t tell us what has happened in April and now May.

In fact, the monthly inflation number fell from 6.8% in February to 6.3% in March, which was a nice drop. If you annualize the 1.4% rise in the March quarter, you get an inflation rate of 5.6%, and that’s even a better drop.

However, these drops aren’t convincing the RBA. That’s why they raised the cash rate by 0.25% in May taking it to 3.85%. Since then, the Albanese Government has come up with a Budget tagged as being pro-inflationary.

Now putting more pressure on the RBA’s ‘knight’ in interest rate armour — Dr Phil Lowe — and his quest to slay the inflation dragon, comes news that a 7% minimum wage is likely to be on its way. But wait, there’s more, with the TWU pushing for bigger pay rises for its 10,000 aviation workers. These employees look like the tip of an iceberg that will bring a pile of other wage demands from different unions.

If you need proof of what I’m predicting, the AFR reports that on Tuesday the Albanese Government offered 160,000 public sector workers a 10.5% pay hike. Fortunately, it was over three years — 4% in year one and then a 3.5% rise followed by a 3% increase.

This is why the expectations of more rate rises are starting to grab headlines this week.

This puts a lot of pressure on the economic data drops we’ll see today, with the Wage Price Index for the March quarter to be put on show. Then tomorrow we’ll see the latest job and unemployment figures.

I’d say if unemployment is stuck on the historically low 3.5% level, or even falls, then a rate rise in June becomes more likely. Dr Phil needs to see that his rate rises are working or he could go for the rate rise lever again.

The only problem for him, interest rate worriers, those in vulnerable jobs and businessowners, is that interest rate rises always work with a lag. In the words of the RBA’s own publication: “Some estimates suggest that it takes between one and two years for monetary policy to have its maximum effect.”

Come June and July, the impact of the mortgage cliff will help Dr Phil kill inflation, as those on low fixed rate home loans migrate to higher rate variable loans. If 11 rate rises become 12 or 13, we could see Australia fall into the recession we didn’t have to have.

The only reason you’d want to be Dr Phil would be for the million-dollar pay packet he pockets, but being the Reserve Bank governor is a tough job.